Author

in partnership with

Ghana

Real Estate

1. Are there restrictions on foreign entities holding interests in land, and if so, how are they expressed?

Under the Constitution of Ghana, foreigners cannot be granted an interest in land which exceeds 50 years.

Employment

2. Are there any conditions placed on the hiring of a foreign worker (e.g. local minimum quotas which must first be met)?

The key qualification criterion for the employment of a foreigner is the unavailability of that foreigner’s expertise in Ghana. An application may be made to the Ghana Investment Promotion Centre (GIPC) for an immigrant quota or an application for a work permit from the Ghana Immigration Service (GIS). A foreigner who obtains an immigrant quota or work permit is also required to obtain a residence permit from the GIS. The number of automatic immigrants allowed by GIPC regulations is dependent on the scale of the capital investment made by the company.

The capital investment and quota prescribed by the GIPC are as follows:

Capital (USD) Automatic quota

50,000 to 250,000 1 person

250,000 to 500,000 2 persons

500,000 to 700,000 3 persons

Above 700,000 4 persons

3. What are the restrictions on redundancies and any applicable compensation?

Under Ghanaian law, there are no restrictions on redundancies per se; however, where the employer contemplates the introduction of major changes in the organisation that are likely to result in the termination of the employees’ employment, the employee is required to notify the Chief Labour Officer and the trade unions (where the staff are unionised) not later than three months before the intended changes. The notice must include relevant information, including reasons for termination, the number and categories of workers to be affected and the period within which the termination will be carried out.

Under Ghanaian labour law, where a redundancy causes the severance of the legal relationship of employee and employer or where the severance causes the employee to become unemployed or to suffer any disadvantages in the terms and conditions of his/her employment, the employee shall be entitled to compensation, commonly referred to as redundancy pay.

The amount of redundancy pay and the terms and conditions of payment are subject to negotiations between the employer and employee/trade union.

Investment and Local Content

4. Are there any general regulations on foreign investment, including any investment requirements for foreign companies to invest in conjunction with local entities or people, and if so, to what effect?

The minimum capitalisation (either cash or capital goods) of a local entity is determined by the nationality of the shareholders and nature of the business. The minimum foreign capital required is as follows:

a joint venture company with Ghanaian and foreign shareholders requires a minimum foreign capital of USD 200,000 with the Ghanaian partner having not less than 10% equity participation;

for a wholly foreign-owned company, the minimum foreign capital required is USD 500,000; and

for trading, a minimum foreign capital of USD 1,000,000 (whether wholly foreign-owned or a joint venture) is required. Additionally, the company is required to employ at least 20 skilled Ghanaians.

There are also sector-specific local content requirements.

Under the Petroleum (Local Content and Local Participation) Regulations, 2013, where the total value of the bid of a qualified indigenous Ghanaian company does not exceed the lowest bid by more than 10%, the law requires the contract to be awarded to the indigenous Ghanaian company.

There is a local content requirement for a non-transferable minimum of 5% shareholding by Ghanaian companies operating in the upstream oil and gas sector. Additionally, foreign entities may only acquire a maximum 50% stake in oil marketing companies operating in the downstream sector.

5. Are there any specific legislative requirements, and if so, what are they?

See the answer to question 4 above.

6. Are there any restrictions on the importation of goods or raw materials into the country, including requirements that local produce is utilised rather than products bought outside the country?

Generally, there are no restrictions on the importation of goods or raw materials into the country. However, there are some restrictions in certain sectors such as the petroleum industry.

Finance

7. Are there any restrictions on the purposes for which money may be lent?

Generally, there are no restrictions on the purpose for which money is lent. However, lenders are prohibited from lending to finance criminal activities such as money laundering, tax evasion or terrorism.

8. How does the law work in relation to security interests in this jurisdiction, and over which classes of assets may security be granted? Does your jurisdiction recognise the concept of a trust and the role of a Security Trustee?

Under Ghanaian law, movable and immovable property can be used as security for a loan transaction. Movables, including receivables, shares, and securities, may be used as security for transactions by the creation of fixed or floating charges in respect of the identified security.

To assess whether a proposed security is free of liens and can be used as security for a transaction, searches must be conducted on the property at the Companies Registry, the Collateral Registry of the Bank of Ghana and at the Lands Registry in respect of land.

Security trustees are recognised under Ghanaian law, and a security trustee or agent may be appointed to hold security on trust on behalf of multiple lenders, or classes of lenders, or other secured parties.

Where an agreement creates security over property which is situated in Ghana or to any matter to be done in Ghana, the requirement is that the agreement must be stamped and registered in Ghana irrespective of the governing law, for the purposes of enforcement of the security in Ghana.

Procurement/PPPs

9. What laws, regulations and guidance are in place to manage the procurement and management of infrastructure projects (including PPPs) and is this regime overseen by a special unit, division or department (such as a PPP unit) within government?

The main law that regulates procurement and management of infrastructure projects (including PPPs) is the Public Procurement Act 2003, as amended by the Public Procurement (Amendment) Act 2016. This law was passed as an integral part of Ghana’s public finance management, good governance reforms and to make further provision for public procurement and to provide for decentralised procurement.

There is a National Policy on PPPs which seeks to promote private participation in infrastructure and services for better public services delivery. The policy sets out certain principles that should guide PPPs in Ghana, including value for money and transparency and accountability. Further, depending on the sector, the sector regulator may make some provisions on how concessions are to be regulated. PPPs in Ghana are regulated by the National Policy for PPPs in Ghana (PPP Policy).

Competition

10. Is there a merger control regime? If so, what are the thresholds for notification?

There is no specific merger control regime in Ghana. However, there are specific rules in respect of publicly traded companies. Generally, the Ghana Securities and Exchange Commission, as established by law, is mandated to review, approve and regulate the takeovers, mergers and acquisitions of listed companies.

Generally, there are no thresholds when it comes to notification of mergers. The sector regulator must be notified of a merger to grant its prior approval where the industry is a regulated industry.

11. Is there a competition/antitrust law that prohibits matters such as abuse of a dominant position, cartel behaviour and exclusivity arrangements, and if so, how actively is it enforced?

There is no general antitrust or competition law in Ghana. A draft bill, the Competition and Fair Trade Practices Bill (the Competition Bill), has been in existence since 2004 and has not yet been passed into law. Currently, the only legislation which makes express reference to “competition” in Ghana is the Protection Against Unfair Competition Act, 2000 (the Unfair Competition Act). However, the Act does not apply in the same way as antitrust or competition legislation in other jurisdictions in the context of mergers and/or acquisitions. It is a general mechanism for the protection of business goodwill and reputation, and proprietary information, whether or not such information or goodwill are registered and the prevention of acts that cause or are likely to cause confusion with respect to another person’s enterprise. There are also various sectoral laws and regulators responsible for the promotion of fair competition.

The Unfair Competition Act does not create any regulatory body or administrative process for the purpose of enforcement. Rather, it provides that an aggrieved person may seek common law remedies in a competent court. The court may award injunctive or other equitable remedies, compensatory damages, or any other remedy that it deems fit.

Intellectual Property

12. What protections does the local law provide for intellectual property rights?

Ghana has in place intellectual property legislation governing geographical indications, trademarks, unfair competition, copyright, industrial designs, patents, and layout-designs (topographies) of integrated circuits. There are civil and criminal sanctions for the infringement of IP legislation in Ghana.

Ghana’s Unfair Competition Act codifies the common law tort of passing off. The Act sets out the various practices deemed as unfair competition, defines these practices and outlines the extent of protection provided under Ghanaian law and other related matters. Major practices considered as unfair under the law include examples such as causing confusion with respect to another’s enterprise or its activities, damaging another person’s goodwill or reputation, misleading the public, discrediting another person’s enterprise or its activities, unfair competition in respect of secret information, and unfair competition in respect of national and international obligations.

The Plant Breeders’ Bill which is currently before Parliament is yet to be passed as there is an ongoing debate on the impact it will have on the agriculture sector.

Tax and Forex

13. What taxes are businesses subject to in this jurisdiction? Please include, for example, corporate tax, VAT, stamp duty, tax on share issues, etc. and the applicable rates. What transfer pricing rules apply, and are any withholding taxes in force in your jurisdiction?

The income of a resident company is subject to a corporate tax of 25% on its annual profit. Under Ghanaian law, a company is considered resident for tax purposes where the company is incorporated or registered in Ghana; or where the management and control of the company is exercised in Ghana at any time within a year of assessment.

Branch offices are required to pay tax on their repatriated profits for a basis period and are additionally required to pay final tax on the gross amount of the earned repatriated profits to the Commissioner-General in accordance with the prescribed rate within 30 days of the end of the basis period.

Withholding taxes are applicable to interest, dividends, rent, fees, supply of goods and services. Companies in Ghana are required to withhold tax from payments and pay the same to the Ghana Revenue Authority (GRA).

VAT is applied on the value added to goods and services. The current rate of VAT is 15% and NHIL is 2.5%.

Stamp duty. There is a requirement under the Stamp Duty Act, 2005 (as amended) to stamp all agreements. Security documents must be stamped prior to registration within 28 days of execution. Subject to certain exceptions, the stamp duty payable on the principal security document is 0.5% of the secured amount and 0.25% of the secured amount for each additional security.

The Income Tax Act, 2015 (as amended) makes provision for Transfer Pricing (TP). The TP rules apply to transactions between parties in a controlled relationship both locally and internationally. Specifically, these are transactions between:

Permanent Establishment (PE) – a separate legal entity and its head office;

a PE and other related branches of that PE;

a tax payer and another taxpayer; and

a taxpayer and another taxpayer in an employment relationship.

A person who engages in transactions with another person with whom they have controlled relationships are required to calculate their income and tax payable from that transaction according to the arm’s length standard.

14. Are there any foreign exchange rules that control repatriation of funds out of this jurisdiction?

Ghana’s foreign exchange regime is governed by the Foreign Exchange Act, 2006. The Central Bank, Bank of Ghana (BoG), regulates foreign exchange business and transfers between residents and non-residents. Payments to or from Ghana between residents and/or non-residents must be made through authorised dealer banks or a person licensed to carry out the business of money transfers.

The Ghana Investment Promotion Centre Act, 2013 guarantees the free transfer from Ghana of net profits accruing to an investment through any authorised dealer bank in any currency. Net profit means profit less all expenses, including tax liabilities. A person who seeks to transfer its profits must show that it has discharged all its tax obligations before the bank can comply with any instruction to effect the repatriation of the profits.

Dispute Resolution

15. What is the courts’ approach to enforcement of foreign judgments or arbitral awards?

Foreign judgments/arbitral awards for countries with which Ghana has reciprocity

Foreign judgments or arbitral awards given by a competent authority in the foreign country are enforceable in Ghana if there is a reciprocal arrangement existing between Ghana and the country in which the award was made. Ghana is party to the New York Convention and foreign arbitral awards are enforceable in accordance with the terms of the Convention. The enforcement of foreign judgments has been incorporated in the Courts Act and the Foreign Judgments and Maintenance Orders (Reciprocal Enforcement) Instrument. The Alternative Dispute Resolution Act, 2010 also recognises the enforcement regime of the New York Convention.

Foreign judgments/arbitral awards from countries with no reciprocity

Where the judgment is issued by a court of a country with which Ghana has no reciprocal enforcement arrangement, a fresh action is required to be commenced in Ghana on the basis of the judgment which becomes evidence in the action. Once the action succeeds and judgment is given in Ghana, the judgment in essence becomes a judgment of a Ghanaian court and is executable using the execution processes available under Ghanaian law.

16. Are the local courts generally supportive of arbitration proceedings (for example, in granting interim relief in support of such arbitrations)?

Yes, where the parties have indicated in the agreement to submit disputes to arbitration, the courts will order the parties to settle the matter by arbitration. The courts can grant interim relief in support of such arbitration proceedings. For example, the court can grant an injunction for preservation of property where the subject of the dispute is in danger.

General

17. In order for a foreign company to sign a document under local law, are there any signing procedures that must be followed?

There are currently no specific signing requirements. However, the Conveyancing Act requires that all documents over land to which a company is a party which will be registered with the Lands Commission must bear the seal or stamp of the company.

Also, according to the Companies Act, 1963 (as amended), all documents such as share certificates, security documents and powers of attorney must bear the seal of the company. However, documents requiring authentication by a company may be signed on its behalf by an officer of the company and need not be under the company’s seal.

18. Are there any current legislative or policy developments that companies investing in this jurisdiction should be aware of?

The Borrowers and Lenders Bill 2017 seeks to provide for a Collateral Registry, a legal framework for the registration of security interests, establish an order of priority of security interests and generally to regulate transactions between borrowers and lenders and for related matters.

The Payment Systems and Services Bill, 2017, which is currently under review, is intended to reflect developments in the payment systems landscape and also to take advantage of technological changes. The Bill, when passed, will regulate institutions which carry on the business of payment services.

Parliament has passed a number of tax laws following the presentation of the 2018 Budget Statement. These require an importer who intends to keep imported goods in a bonded warehouse to provide letters of credit, bank guarantees or insurance cover. This measure is to ensure the government does not lose the import duty on goods in bonded warehouses.

The Ghana International Trade Commission (GITC) Act, 2016 establishes the GITC as the agency responsible for ensuring compliance with the rules and regulations of international trade.

The Act empowers the GITC to harmonise Ghana’s international trade regulations with those of the world trade system, advise the Minister of Trade on Ghana’s compliance with its bilateral and multi-lateral treaty obligations, conduct studies and publish reports on the competitiveness of Ghana’s tariff structure and its impact on domestic industry, market access and challenges in relation to exports.